The Nat. Grange of the Order of Patrons of Husbandry v. California Guild

Filed 7/23/19; Certified for publication 8/13/19 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
THE NATIONAL GRANGE OF THE ORDER C085210
OF PATRONS OF HUSBANDRY,
(Super. Ct. No.
Plaintiff and Respondent, 342012000130439CUMCGDS)
v.
CALIFORNIA GUILD et al.,
Defendants;
CALIFORNIA STATE GRANGE et al.,
Interveners and Respondents;
ELLIS LAW GROUP, LLP,
Appellant.
THE NATIONAL GRANGE OF THE ORDER C085873
OF PATRONS OF HUSBANDRY et al.,
(Super. Ct. No.
Plaintiffs and Respondents, 34201200130439CUMCGDS)
1
v.
CALIFORNIA GUILD et al.,
Defendants;
CALIFORNIA STATE GRANGE et al.,
Interveners and Respondents;
ELLIS LAW GROUP, LLP,
Appellant.
CALIFORNIA STATE GRANGE et al., C085880
Plaintiffs and Respondents, (Super. Ct. No.
34201600192665CUMCGDS)
v.
CALIFORNIA GRANGE FOUNDATION,
Defendant;
ELLIS LAW GROUP, LLP,
Appellant.
These cases come to us as part of ongoing litigation between The National Grange
of the Order of Patrons of Husbandry (the National Grange) and the Order’s1 relatively
recent charter the California State Grange (the California Grange) (collectively
respondents) against the Order’s former California charter, now known as the California
1 The Order refers to the Order of Patrons of Husbandry’s organization as a whole,
which consist of the National Grange and various constituent granges, including its state
charters.
2
Guild (the Guild), which operated the California Grange Foundation (the Foundation)
when the Guild’s charter was previously active.2 At issue here is the disqualification of
the law firm representing the Guild and the Foundation -- Ellis Law Group -- following
its hiring of an attorney who previously worked for Porter Scott, the law firm
representing the National Grange. The trial court granted respondents’ motions to
disqualify Ellis Law Group in litigation initiated in 2012 while the court’s prior order
granting summary judgment in favor of the National Grange was pending on appeal in
this court.3 In litigation initiated in 2016 by only the California Grange against the
Foundation, the trial court granted the California Grange’s motion to disqualify Ellis Law
Group as well. We affirm these orders.
FACTUAL AND PROCEDURAL BACKGROUND4
I
2012 Litigation
In October 2012, the National Grange initiated litigation against the Guild,
ultimately seeking a declaration to recover property the Guild refused to convey to the
2 Also named as parties in these cases are various officers or members of the
organization and constituent granges. We will address their identities when appropriate.
When referring to the National Grange, the California Grange, and the Guild we are also
referring to the officers or members named in the suit unless indicated otherwise.
3 We affirmed the trial court’s order granting summary judgment. (National
Grange of the Order of Patrons of Husbandry v. California Guild (2017) 17 Cal.App.5th
1130, 1134 (National Grange).)
4 Respondents move for judicial notice of five court orders disqualifying Ellis Law
Group from representing the Guild and the Foundation. We grant the motion in part and
take judicial notice of the order issued by this court in case No. C080523. Because we
have consolidated these appeals, we deny the motion as moot as to the trial court orders
now before us in this appeal. Finally, we deny respondents’ motion as to the order filed
by this court in case No. C082338 and the order filed by the Sonoma County Superior
Court in case No. SCV-260954 because they are irrelevant to resolution of this appeal.
3
Order’s new California charter -- the California Grange, which was chartered in July
2014 -- after revocation of the Guild’s charter. (National Grange, supra, 17 Cal.App.5th
at pp. 1139-1140.) The California Grange intervened in this litigation in October 2014.
(Id. at p. 1140, fn. 5.)
From the time this litigation was initiated until present, Porter Scott represented
the National Grange and its former master Ed Luttrell, also named as a plaintiff in the
suit. Schiff Hardin represented the California Grange and its master Ed Komski from
August 2014 until present. Starting in February 2014, however, Komski was in
communication with the National Grange and Porter Scott about the ongoing litigation
and chartering process. Komski “freely shared confidential information with the National
Grange’s attorneys because [he] understood them to also be acting as the California State
Grange’s attorneys when it was [i]nactive and before it retained its own counsel.” Even
after the California Grange retained Schiff Harden, Komski shared confidential
information with the attorneys at Porter Scott and authorized counsel to do so as well. “It
[was Komski’s] understanding that the National Grange and the California State Grange
are jointly litigating the [case], seek the same ultimate relief, and have a complete unity
of interests in this lawsuit.”
Boutin Jones represented the Guild and its executive committee John Luvaas,
Gerald Chernoff, Damian Parr, Takashi Yogi, Kathy Bergeron, and Bill Thomas, while
Ellis Law Group represented the Guild’s Master/President Robert McFarland.
Between March 10, 2014, and October 6, 2014, Anthony P. J. Valenti worked for
Porter Scott. In total, Valenti billed 26 hours on the 2012 litigation by assisting in
discovery, drafting memoranda, performing case law research, and communicating by
phone and e-mail with Luttrell and Boutin Jones. “As an associate working on behalf of
the National Grange, Mr. Valenti had complete, unrestricted access to [the National
Grange’s] confidential and privileged information and actual knowledge of that
information.”
4
In September 2015, the trial court granted the National Grange’s motion for
summary judgment finding property held by the Guild at the time of the revocation
“ ‘should revert to possession and/or control of the [California Grange] under the
Bylaws’ ” of the Order. (National Grange, supra, 17 Cal.App.5th at p. 1143.) The
Guild, its executive committee, and McFarland all appealed, with Luvaas, Chernoff, and
Parr later abandoning that appeal. (Id. at p. 1143, fn. 8.) By the end of 2016, and after
the opening briefs were filed, the Guild and the remaining executive committee members
retained Ellis Law Group as counsel.5
In March 2017, respondents learned Ellis Law Group had hired Valenti as an
associate in April 2016. Respondents became aware of this fact because Ellis Law Group
indicated Valenti was an attorney of record for the Guild on documents filed in litigation
between the parties then pending in federal court. Valenti was also included on two e-
mails around this time regarding the 2016 litigation between the California Grange and
the Foundation. Ellis Law Group maintained that Valenti’s name appeared on those
documents by mistake.
Mark Ellis, the managing partner of Ellis Law Group and attorney of record for
the Guild, was aware upon Valenti’s hiring that he had previously worked for Porter
Scott. At the time of his interview, Ellis asked Valenti whether he had ever worked on
any of the National Grange litigation or learned any confidential information about the
matter, to which Valenti said “ ‘no.’ ” Out of an abundance of caution, however, Ellis
“ordered immediately that [Valenti] be ethically screened with no participation in, or
having anything to do with, the National Grange cases, and he was, in fact, ethically
screened in all contexts as to the National Grange cases.” The files for the case were
“segregated in a separate ‘Grange’ war room at Ellis Law Group office, to which
5 Because all defendants now share the same counsel, we will refer to them
collectively from hereon as the Guild, unless indicated otherwise.
5
[Valenti] had no access.” Further, the attorneys and paralegals assigned to the case “were
instructed not to talk with Mr. Valenti about the Grange matters, and he was so instructed
as well. He was not on any Grange distribution list.”6
In November 2016, after obtaining files from Boutin Jones related to this
litigation, Ellis learned Valenti had worked on discovery matters for the National Grange,
as well as had spoken with Luttrell about the case. Ellis asked Valenti again whether he
had worked on the case and Valenti stated he did not recall ever having worked for the
National Grange.
Upon learning of Valenti’s employment with Ellis Law Group, the National
Grange filed a motion to disqualify Ellis Law Group in the trial court, as did the
California Grange.7 The National Grange also filed a motion to disqualify Ellis Law
Group from the then pending appeal in this court. The trial court granted respondents’
motions, as did we. In both trial court orders, it reasoned that Valenti had previously
represented the National Grange and the California Grange, both of which had a
substantial relationship to Ellis Law Group’s representation of the Guild because the
representation involved the same case. Because of this relationship, it was presumed that
6 The evidence on this point is conflicting. In the California Grange’s motion to
disqualify Ellis Law Group it included a declaration from Ellis Law Group’s former legal
assistant who worked at the firm from the summer of 2016 until January 2017. During
her time with Ellis Law Group, the legal assistant worked on the Grange cases and was a
legal assistant to Valenti. At no time was she informed of the existence of an ethical wall
nor were the Grange files kept in a separate room from where Valenti could access them.
Ellis Law Group disputes these claims and submitted declarations from employees to the
contrary.
7 The California Grange initially sought to join the National Grange’s motion to
disqualify Ellis Law Group. The trial court denied the motion without prejudice to the
extent it sought relief beyond what was requested by the National Grange. It reasoned
the California Grange presented no factual or evidentiary showing relevant to the
disqualification analysis. The California Grange later filed its own motion to disqualify
Ellis Law Group.
6
Valenti possessed confidential information adverse to the National Grange and the
California Grange. He was therefore disqualified from representing the Guild. Our order
contained the same analysis. The trial court further held Ellis Law Group was
automatically disqualified from representing the Guild because Valenti represented the
opposing side in the same lawsuit. Again, our order contained the same analysis.
Ellis Law Group appeals the trial courts orders. (See Kirk v. First American Title
Ins. Co. (2010) 183 Cal. App. 4th 776, 791, fn. 10.)
II
2016 Litigation8
Following the disqualification of Ellis Law Group from the 2012 litigation, the
California Grange filed a motion to disqualify it from representing the Foundation in
litigation resulting from a complaint it and Komski filed in 2016. That action involves
the control of charitable funds held by the Foundation, which was created in 1992 by the
Order’s then California charter. The California Grange contends that upon revocation of
the charter, the Guild diverted the property of the Foundation to itself when it should
have returned it to the newly chartered California Grange.
The California Grange’s motion was based on the same facts presented in its
motion relating to the 2012 litigation. Ellis Law Group submitted additional evidence in
opposition to the motion, including an undated memo circulated to the entire firm
8 In a footnote to its opening brief regarding the 2016 litigation, Ellis Law Group
moves for judicial notice of the California Grange’s articles of incorporation and a
federal court order dismissing the California Grange from litigation involving the
“ ‘California State Grange’ ” trademark. It did not provide us with the documents it
seeks for us to judicially notice. We deny Ellis Law Group’s motion because it was
improperly brought. (See Cal. Rules of Court, rules 8.252(a), 8.386(e).) We further
conclude the standing argument advanced in that same footnote is forfeited for failure to
comply with the California Rules of Court. (Cal. Rules of Court, rule 8.204(a)(1)(B)
[briefs must state each point under a separate heading or subheading “and support each
point by argument and, if possible, by citation of authority”].)
7
outlining the standards for “continuing compliance with the tenets of an ethical wall,”
which had already been discussed among the staff. The memo provides that Valenti
“shall not be permitted to disclose or discuss any information related to or concerning any
National Grange matter” and that his legal assistant will not be permitted to work on
“National Grange cases.” The memo also provides that the files for the National Grange
cases will remain segregated and not accessed by either Valenti or his legal assistant, in
addition to other measures to ensure Valenti and his legal assistant are not contacted
regarding the Grange matters. The memo was signed by all employees of the firm.
Valenti and his legal assistant also signed affidavits agreeing to comply with the firm’s
ethical screen related to Grange matters. Ellis Law Group also submitted what appears to
be a photo of the room where it keeps Grange related files, with the previously described
memo posted on the door.
The trial court granted the California Grange’s motion to disqualify. It found Ellis
Law Group’s representation of the Foundation had a substantial relationship to Valenti’s
prior representation of respondents mandating disqualification of Valenti. Because Ellis
Law Group’s representation of the Foundation was not in the same case as Valenti’s
representation of respondents, the trial court did not believe disqualification of Ellis Law
Group was mandatory and instead analyzed the effectiveness of the ethical wall it
imposed. It found the ethical wall lacking and disqualification of Ellis Law Group
necessary.
Ellis Law Group appeals.
DISCUSSION
“Whether an attorney should be disqualified is a matter addressed to the sound
discretion of the trial court. [Citations.] In exercising that discretion, the trial court is
required to make a reasoned judgment which complies with the legal principles and
policies applicable to the issue at hand. [Citation.] Discretion will thus be deemed to
have been abused if the trial court fails to exercise discretion where such exercise is
8
required.” (Henriksen v. Great American Savings & Loan (1992) 11 Cal. App. 4th 109,
113.)
“Under [former9] rule 3-310(D) of the California Rules of Professional Conduct,
an attorney may not represent a new client whose interests are adverse to those of a
former client on a matter in which the attorney has obtained confidential information.
The purpose of the rule is to protect the confidential relationship which exists between
attorney and client, a relationship which continues after the formal relationship ends.
[Citation.] The fiduciary nature of that relationship requires the application of strict
standards. [Citation.] For that reason, a former client may seek to disqualify a former
attorney from representing an adverse party by showing that the former attorney
possesses confidential information adverse to the former client. [Citation.]
“In order to seek disqualification, the former client need not establish that the
attorney actually possesses confidential information. It is enough to show that there was
a ‘substantial relationship’ between [the subjects of] the former and the current
representation. If the former client establishes the existence of a substantial relationship
between the two representations the court will conclusively presume that the attorney
possesses confidential information adverse to the former client and order
disqualification.” (Henriksen v. Great American Savings & Loan, supra, 11 Cal.App.4th
at pp. 113-114, fn. omitted; Kirk v. First American Title Ins. Co., supra, 183 Cal.App.4th
at p. 796.)
“As a general rule in California, where an attorney is disqualified from
representation, the entire law firm is vicariously disqualified as well. [Citations.] This is
especially true where the attorney’s disqualification is due to his prior representation of
the opposing side during the same lawsuit.” (Henriksen v. Great American Savings &
9 Following the trial court’s orders, the California Rules of Professional Conduct
were amended.
9
Loan, supra, 11 Cal.App.4th. at pp. 114-115, fn. omitted.) In such a case, a court has “no
choice but to disqualify the entire firm.” (Id. at p. 115.) “[T]he ethical wall concept has
not found judicial acceptance in California on our facts: a nongovernmental attorney
armed with confidential information who switches sides during the pendency of
litigation. . . . [T]he entire firm must be vicariously disqualified even if [the disqualified
attorney] has been ethically screened from day one.” (Id. at pp. 115-116, fn. omitted.)
“[T]he rule [is] quite clear cut in California: where an attorney is disqualified because he
formerly represented and therefore possesses confidential information regarding the
adverse party in the current litigation, vicarious disqualification of the entire firm is
compelled as a matter of law.” (Id. at p. 117; see also Kirk v. First American Title Ins.
Co., supra, 183 Cal.App.4th at p. 800 [noting “the Hendriksen rule that vicarious
disqualification should be automatic in cases of a tainted attorney possessing actual
confidential information from a representation, who switches sides in the same case”].)
If, however, the attorney represented the adverse party in a different case, then “a
case-by-case analysis based on the circumstances present in, and policy interests
implicated by, the case” is appropriate. (Kirk v. First American Title Ins. Co., supra, 183
Cal.App.4th at p. 800.) “Once the moving party in a motion for disqualification has
established that an attorney is tainted with confidential information, a rebuttable
presumption arises that the attorney shared that information with the attorney’s law firm.
The burden then shifts to the challenged law firm to establish ‘that the practical effect of
formal screening has been achieved. The showing must satisfy the trial court that the
[tainted attorney] has not had and will not have any involvement with the litigation, or
any communication with attorneys or []employees concerning the litigation, that would
support a reasonable inference that the information has been used or disclosed.’ ” (Id. at
pp. 809-810, fn. omitted.)
“The specific elements of an effective screen will vary from case to case, although
two elements are necessary: First, the screen must be timely imposed; a firm must
10
impose screening measures when the conflict first arises. . . . Second, it is not sufficient
to simply produce declarations stating that confidential information was not conveyed or
that the disqualified attorney did not work on the case; an effective wall involves the
imposition of preventive measures to guarantee that information will not be conveyed.”
(Kirk v. First American Title Ins. Co., supra, 183 Cal.App.4th at p. 810.) “ ‘The typical
elements of an ethical wall are: [(1)] physical, geographic, and departmental separation
of attorneys; [(2)] prohibitions against and sanctions for discussing confidential matters;
[(3)] established rules and procedures preventing access to confidential information and
files; [(4)] procedures preventing a disqualified attorney from sharing in the profits from
the representation; and [(5)] continuing education in professional responsibility.’ ” (Id. at
pp. 810-811, quoting Henriksen v. Great American Savings & Loan, supra, 11
Cal.App.4th at p. 116, fn. 6.)
I
2012 Litigation
Ellis Law Group contends the trial court improperly disqualified it from
representing the Guild in the 2012 litigation. We disagree.
As the trial court found, because Valenti previously represented respondents in the
2012 litigation, he is presumed to possess confidential information adverse to those
parties and therefore he and the law firm he works for is disqualified from representing
the Guild in that case.
Ellis Law Group argues this is a faulty conclusion for multiple reasons.10 Specific
to the California Grange, Ellis Law Group argues no evidence established Valenti or
10 We reject Ellis Law Group’s procedural argument that the California Grange’s
motion to disqualify “was a thinly disguised motion for reconsideration by another name”
that did not abide by the rules for filing of such a motion. We agree with the general
proposition that Code of Civil Procedure section 1008 prohibits a party from filing
repetitive motions for the same relief. “Here, [however], the trial court indicated it
11
Porter Scott ever represented the California Grange. Not so. The California Grange
could not act on its own behalf while it was inactive. As a result, the National Grange
acted on behalf of the California Grange at that time. Indeed, Komski declared he freely
shared confidential information with Porter Scott attorneys starting in February 2014 and
throughout the litigation. The California Grange was chartered in July 2014 and retained
its own counsel in August 2014. Thus, between February 2014 and August 2014, Porter
Scott represented the California Grange. Valenti worked for Porter Scott starting in
March 2014 and until October 2014, at which time he worked on the 2012 litigation, thus
representing the California Grange. The fact that the California Grange did not have a
formal retainer agreement is of no consequence as the attorney-client relationship does
not form upon the signing of a contract but when “ ‘a party seeking legal advice consults
an attorney at law and secures that advice.’ ” (People ex rel. Dept. of Corporations v.
SpeeDee Oil Change Systems, Inc. (1999) 20 Cal. 4th 1135, 1148.)
Ellis Law Group next argues no evidence established Valenti actually learned of
any confidential information adverse to respondents. This, however, is not the test. Once
it is established that an attorney worked on a prior case substantially related to the current
case, or in this instance the same case, it is conclusively presumed that attorney knows
confidential information adverse to his or her former client. (Henriksen v. Great
American Savings & Loan, supra, 11 Cal.App.4th at pp. 113-114.) Thus, respondents
need not show Valenti actually knew confidential information.
Ellis Law Group’s reliance on Adams is misplaced. Adams involved the
disqualification of an attorney whose former firm represented a client in a matter
wanted to reconsider the [disqualification] issue when it denied the first motion without
prejudice, so Code of Civil Procedure section 1008 is inapplicable. Denial of a motion
without prejudice impliedly invites the moving party to renew the motion at a later date,
when he can correct the deficiency that led to the denial.” (Farber v. Bay View Terrace
Homeowners Assn. (2006) 141 Cal. App. 4th 1007, 1015.)
12
substantially related to a current lawsuit in which the attorney represented parties adverse
to that former client. The attorney was not personally involved in his former firm’s
representation of the client. (Adams v. Aerojet-General Corp. (2001) 86 Cal. App. 4th
1324, 1329-1330.) The Adams court concluded the attorney’s knowledge of confidential
information, necessarily resulting in his disqualification, could not be presumed solely
from the attorney’s membership in his former firm. (Id. at p. 1337.) Instead, Adams
stated a “modified version of the ‘substantial relationship’ test” applied. (Id. at p. 1340.)
Upon remand, Adams instructed the trial court to determine based on the particular
circumstances of the case whether the attorney was reasonably likely to have obtained
confidential information relating to the current representation while working for his
former firm. (Id. at pp. 1340-1341.) In contrast, Valenti personally worked on the case
the former clients sought to disqualify him from, thus his possession of confidential
information is presumed.
Ellis Law Group further attacks the court’s conclusions arguing no evidence
established Valenti ever represented the Guild since he was ethically screened from the
start of his employment at Ellis Law Group. Thus, Valenti did not represent a client
adverse to his former client. The fact that Valenti would be disqualified if he represented
the Guild is enough for our purposes here. Attorneys who work together are presumed to
talk to one another. (See Kirk v. First American Title Ins. Co., supra, 183 Cal.App.4th at
p. 800.) The fact that Valenti worked for a client in litigation and then worked for the
firm representing the adverse party in the same litigation presents the same concerns as if
Valenti represented the adverse party himself. By simply not listing an attorney as an
attorney of record or keeping that attorney’s name off documents and other
communications to avoid disqualification allows for an exception that would swallow the
rule.
Ellis Law Group also argues that an effective ethical wall was in place from the
beginning of Valenti’s employment, ensuring no confidential information passed from
13
him to other members of the firm. Because Valenti and Ellis Law Group represent an
adverse party to Valenti’s former client in the same litigation, a court has “no choice but
to disqualify the entire firm.” (Hendriksen v. Great American Savings & Loan, supra, 11
Cal.App.4th at p. 115.) The effectiveness of the ethical wall in place is irrelevant to our
inquiry here.
Ellis Law Group next appeals to concepts of equity. As to the California Grange,
Ellis Law Group argues the California Grange waited too long to bring its
disqualification motion, thus forfeiting the issue.11 This argument is premised on the
assumption the California Grange learned of Valenti’s hiring in June 2016. To support
this assumption, Ellis Law Group points to a forensic analysis it had done of visitors to its
firm Web site and Valenti’s profile in particular. The results showed that somebody
using Porter Scott’s IP address viewed Valenti’s profile on June 10, 2016. This evidence,
however, does not show who accessed Valenti’s profile, let alone that it was an attorney
of Porter Scott or an attorney assigned to this particular case. As a result, we cannot say
the California Grange learned of Valenti’s hiring in June 2016 and thus forfeited its claim
by waiting until April 2017 to move for disqualification.
As to respondents, Ellis Law Group argues policy interests mandate denial of the
disqualification motions. The thrust of Ellis Law Group’s argument is disqualification
would be unfair because Ellis Law Group is an innocent actor and believed Valenti when
he said he had not worked on Grange matters while working at Porter Scott. We do not
see Ellis Law Group as innocent as it paints itself. By its own admissions, it learned in
November 2016 that Valenti worked on this litigation and did nothing to inform opposing
11 While Ellis Law Group argues in its brief challenging the trial court’s order
disqualifying it from representing the Guild against the California Grange that the
National Grange also forfeited this issue, that argument is not advanced in its brief
challenging its disqualification in the litigation against the National Grange.
14
counsel of that discovery, let alone seek waiver as the professional rules required. (Rules
Prof. Conduct, former rule 3-310(E).)
Neither would ordering disqualification “call into question the fairness of the
process.” On the contrary, not ordering disqualification would undermine confidence in
the legal process. “The paramount concern must be to preserve public trust in the
scrupulous administration of justice and the integrity of the bar. The important right to
counsel of one’s choice must yield to ethical considerations that affect the fundamental
principles of our judicial process.” (People ex rel. Dept. of Corporations v. SpeeDee Oil
Change Systems, Inc., supra, 20 Cal.4th at p. 1145.) “Protecting the confidentiality of
communications between attorney and client is fundamental to our legal system. The
attorney-client privilege is a hallmark of our jurisprudence that furthers the public policy
of ensuring ‘ “the right of every person to freely and fully confer and confide in one
having knowledge of the law, and skilled in its practice, in order that the former may
have adequate advice and a proper defense.’ ” ’ (Id. at p. 1146.)
The evidence showed Valenti’s name appeared on communications from Porter
Scott to Boutin Jones, who represented the Guild defendants other than McFarland prior
to retention of Ellis Law Group. Following Valenti’s hiring by Ellis Law Group, the
Guild and executive committee members other than McFarland hired Ellis Law Group as
counsel. While the Guild’s and executive committee members’ motives may have been
pure and finding new counsel in the future may be burdensome, viewing this series of
events from respondents’ perspective calls into doubt the integrity of the legal system if
disqualification is not ordered.
Further, there is no evidence respondents sought to disqualify Ellis Law Group for
tactical reasons as Ellis Law Group suggests. Indeed, the matter had already progressed
through the trial court and appellate briefing had been completed at the time respondents
moved for disqualification. Moreover, as discussed, there was no meaningful delay
between respondents’ discovery of Valenti’s hiring by Ellis Law Group and the filing of
15
respondents’ motions to disqualify. Accordingly, public policy weighs in favor of
disqualification.
Finally, Ellis Law Group argues the law mandating automatic disqualification
when an attorney who previously represented a client in an action begins working at the
firm representing an adverse client in the same litigation is flawed and outdated. It urges
us to follow Kirk. As shown above, we are. After an in-depth analysis of the law
regarding disqualification, the Kirk court concluded the applicable rule was as follows:
“Given this history, we conclude that it is improper to rely on Flatt as creating an
absolute rule of vicarious disqualification in California. Instead, we believe that neither
Flatt nor SpeeDee Oil addressed the issue of whether vicarious disqualification is
absolute, and the state of the law is that as initially expressed by the appellate courts:
(1) a case-by-case analysis based on the circumstances present in, and policy interests
implicated by, the case; (2) tempered by the Henriksen rule that vicarious disqualification
should be automatic in cases of a tainted attorney possessing actual confidential
information from a representation, who switches sides in the same case.” (Kirk v. First
American Title Ins. Co., supra, 183 Cal.App.4th at p. 800.)
As discussed, because Valenti worked on the 2012 litigation on behalf of
respondents, he is presumed to possess confidential information, and he then switched
sides in the same case. Accordingly, disqualification of Ellis Law Group is required in
the 2012 litigation.
II
2016 Litigation
Ellis Law Group contends the trial court abused its discretion by disqualifying it
from the 2016 litigation between the California Grange and the Foundation. Again, we
disagree.
As an initial matter, we reject Ellis Law Group’s argument Valenti did not
represent the California Grange for the reasons already provided. Moreover, as the trial
16
court found the California Grange and the National Grange had a unity of interest in the
2012 litigation, such that respondents may be treated as one for conflict purposes.
Indeed, the whole purpose of the 2012 litigation initiated by the National Grange was to
transfer property from the Guild to the California Grange as the Guild was required to do
when its charter was revoked. The arguments would have been the same had it been the
California Grange that filed the litigation as opposed to the National Grange. The only
reason the California Grange could not sue on its own behalf was because it had not yet
been chartered. (See Morrison Knudsen Corp. v. Hancock, Rothert & Bunshoft (1999) 69
Cal. App. 4th 223, 248 [finding unity of interest between a client corporate parent and
nonclient wholly owned subsidiary].) Thus, the California Grange is a former client of
Valenti and can seek his and Ellis Law Group’s disqualification by a showing the current
representation has a substantial relationship to the past representation.
In this vein, Ellis Law Group does not take issue with the trial court’s finding that
the issues presented in the 2012 litigation were substantially related to the issues
presented in the 2016 litigation. Instead, it presents the same arguments it did when
challenging the court’s orders disqualifying it from the 2012 litigation. First, Ellis Law
Group contends Valenti never represented the Foundation, so he nor Ellis Law Group can
be disqualified from representing it now. We reject this argument for the same reasons
we rejected it regarding the Guild. Valenti works for Ellis Law Group, that is enough for
our purposes here.
Second, Ellis Law Group contends no evidence showed Valenti ever obtained any
confidential information from the California Grange. Having concluded the two cases
are substantially related as the trial court did, a finding Ellis Law Group does not
challenge, that is the end of our inquiry as far as Valenti’s knowledge is concerned. It is
presumed he knows confidential information; no showing is required. (See Henriksen v.
Great American Savings & Loan, supra, 11 Cal.App.4th at pp. 113-114.) For the same
17
reasons already stated -- that Valenti actually worked on the 2012 litigation -- Adams is
inapplicable to the analysis regarding the 2016 litigation.
Third, the California Grange did not unreasonably delay as Ellis Law Group
contends. Again, this argument is premised upon the assumption the California Grange
learned of Valenti’s employment at Ellis Law Group in June 2016. The evidence does
not substantiate this assumption.
Having shown the 2012 and 2016 litigation were substantially related, our inquiry
now moves to whether Ellis Law Group has imposed an effective ethical wall. (Kirk v.
First American Title Ins. Co., supra, 183 Cal.App.4th at pp. 800, 809-810 [If the attorney
represented the adverse party in a different case, a rebuttable presumption arises, and the
challenged law firm must establish the practical effect of formal screening has been
achieved].) Ellis Law Group argues it met its burden because it imposed an ethical wall
upon Valenti’s hiring that segregated him from Grange related files and associates
assigned to the cases. The problem with this argument is the evidence to support it was
not created contemporaneous with the imposition of an ethical wall. The memo
submitted by Ellis Law Group was prepared to document the continued adherence to the
rules verbally imposed by Ellis, as was Valenti’s and his secretary’s signing of an
affidavit. Similarly, the declarations were prepared to document what was previously
told to Ellis Law Group employees. There is no evidence of practices and policies
regarding an ethical wall being formally imposed at the time of Valenti’s hiring and
declarations purporting to impose such protective measures are insufficient. (Kirk v.
First American Title Ins. Co., supra, 183 Cal.App.4th at p. 810.) Moreover, evidence of
the ethical wall was conflicting and mistakes did in fact occur -- Valenti’s name appeared
as an attorney of record on court documents and he was copied on communications with
opposing counsel -- further tending to show any ethical wall that was imposed was
ineffective.
18
Ellis Law Group’s reliance on Kirk is misplaced. It relies on this case to argue
“automatic disqualification of the entire firm was not warranted based solely on the fact
that the firm subsequently employed” an attorney who previously worked at a firm that
represented an adverse party. We agree this was the holding of Kirk, as did the trial court
(see Kirk v. First American Title Ins. Co., supra, 183 Cal.App.4th at pp. 800, 809-810)
which is why the trial court analyzed the ethical wall imposed by Ellis Law Group to
assess its effectiveness. Like us, it found the ethical wall ineffective. We conclude there
was no abuse of discretion in that finding.
Ellis Law Group’s remaining arguments are those also made regarding the 2012
litigation -- that policy demands the Foundation be allowed to retain Ellis Law Group as
counsel and adherence to Hendriksen is flawed and outdated. We reject these arguments
for the same reasons we rejected them in connection with the 2012 litigation.
Accordingly, the trial court did not err by disqualifying Ellis Law Group from
representing the Foundation in the 2016 litigation.
DISPOSITION
The orders disqualifying Ellis Law Group are affirmed. Respondents are awarded
costs on appeal. (Cal. Rules of Court, rule 8.278(a)(2).)
/s/
Robie, Acting P. J.
We concur:
/s/
Hoch, J.
/s/
Krause, J.
19
Filed 8/13/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
THE NATIONAL GRANGE OF THE ORDER C085210
OF PATRONS OF HUSBANDRY,
(Super. Ct. No.
Plaintiff and Respondent, 34201200130439CUMCGDS)
v. ORDER CERTIFYING
OPINION FOR PUBLICATION
CALIFORNIA GUILD et al.,
Defendants;
CALIFORNIA STATE GRANGE et al.,
Interveners and Respondents;
ELLIS LAW GROUP, LLP,
Appellant.
THE NATIONAL GRANGE OF THE ORDER C085873
OF PATRONS OF HUSBANDRY et al.,
(Super. Ct. No.
Plaintiffs and Respondents, 34201200130439CUMCGDS)
v.
CALIFORNIA GUILD et al.,
1
Defendants;
CALIFORNIA STATE GRANGE et al.,
Interveners and Respondents;
ELLIS LAW GROUP, LLP,
Appellant.
CALIFORNIA STATE GRANGE et al., C085880
Plaintiffs and Respondents, (Super. Ct. No.
34201600192665CUMCGDS)
v.
CALIFORNIA GRANGE FOUNDATION,
Defendant;
ELLIS LAW GROUP, LLP,
Appellant.
THE COURT:
The opinion in the above-entitled matter filed on July 23, 2019, was not certified
for publication in the Official Reports. For good cause it now appears that the opinion
should be published in the Official Reports and it is so ordered.
BY THE COURT:
/s/
Robie, Acting P. J.
/s/
Hoch, J.
/s/
Krause, J.
2
EDITORIALS
C085210
APPEAL from a judgment (order) of the Superior Court of Sacramento County,
David I. Brown, Judge. Affirmed.
Porter Scott, Martin N. Jensen and Thomas L. Riordan, for Plaintiff and
Respondent The National Grange of the Order of Patrons of Husbandry.
No appearance for Defendants California Guild.
Schiff Harden, Jeffrey D. Skinner for Interveners and Respondents California
State Grange and Ed Komski.
Ellis Law Group, Mark E. Ellis and Maria S. Rosenfeld for Appellant Ellis Law
Group.
C085873
APPEAL from a judgment (order) of the Superior Court of Sacramento County,
David I. Brown, Judge. Affirmed.
Porter Scott, Martin N. Jensen and Thomas L. Riordan, for Plaintiffs and
Respondents The National Grange of the Order of Patrons of Husbandry.
No appearance for Defendants California Guild.
Schiff Harden, Jeffrey D. Skinner for Interveners and Respondents California
State Grange and Ed Komski.
Ellis Law Group, Mark E. Ellis and Maria S. Rosenfeld for Appellant Ellis Law
Group.
C085880
APPEAL from a judgment (order) of the Superior Court of Sacramento County,
Raymond M. Cadei, Judge. Affirmed.
Schiff Harden, Jeffrey D. Skinner for Plaintiffs and Respondents California State
Grange and Ed Komski.
No appearance for Defendant California Grange Foundation.
3
Ellis Law Group, Mark E. Ellis and Maria S. Rosenfeld for Appellant Ellis Law
Group.
4